Thirty Years in Finance
Thirty years ago this week, I walked into my first job in finance. I’d like to say I have vivid recollections but the truth is, memories of my first day are hazy.
I remember the building: a converted car park close to London Bridge on the River Thames; visitors entered on the riverside, staff round the back. I remember the people: fellow graduate trainees from all over the world, naive to the workings of the City but keen to impress. And because I kept my offer letter, I remember the terms of my employment: a starting salary of £22,000 ($35,000) plus a signing-on bonus of £2,000 to buy suits; hours of work 9-5 Monday to Friday (however, you will be expected to devote sufficient time to your duties which may require you to attend the office or to be available outside these hours and days…); and a new policy introduced just a few months before my arrival: no smoking in the office.
In the time that has elapsed, a lot has changed. The building is no longer there, nor the firm. Even the firm that bought the firm has ceased to exist. The people I spent three months bonding with over bond math have mostly churned through the industry. As a reflection of how fashions have evolved since we sat in a training room together, our standard-issue copy of Principles of Corporate Finance (4th ed) has been revised and updated to include sections on corporate governance and risk management—issues fledgling bankers in the 1990s didn’t have to worry about.
But a lot also remains the same. As I look back on my experiences entering the industry 30 years ago, it’s the constants that are more interesting—in the structure of the industry, in markets and in career progression. Let’s take a look at what hasn’t changed:
Americans Do It Better
“Don’t work for an American firm,” they said, “they’ll work you too hard.” No problem, I thought, there’s a long list of British firms I can apply to. I dispatched my résumé to all of them: Barings, Rothschild, NatWest, Barclays de Zoete Wedd, SG Warburg, Kleinwort Benson and, for contrast, Chase Manhattan because I knew someone who worked there.
One by one they called me in for interview. (All except Barings who turned me down flat, more fool them). SG Warburg made me submit a handwriting sample, a policy initiated by Sir Siegmund, a keen proponent of graphology. An options trader at Chase threw me the Monty Hall problem, the first time I’d heard it. One firm arranged for the door knob to the meeting room to fall off in my hand and, when I stumbled in, they told me I was 30 seconds late which left us with only fourteen and a half minutes of interview time. “How many seconds is that?” they barked.
I succeeded in passing these odd initiation tests and was offered a number of positions: M&A at one firm, investment management at another. But I was attracted to the hum of equity markets and so I joined Barclays de Zoete Wedd (BZW) to take up a role in equity research (the £2k signing-on bonus helping me to make up my mind).
Unbeknown to me, the firm wasn’t all that. It had been conceived a decade earlier as an outlet for Barclays’ investment banking ambitions and for a while it seemed to be doing well. The year before I arrived, BZW earned profits of £501 million and generated a return on capital in excess of 40%. Staff of 6,000 shared a bonus pool of £100 million. But results were flattered by the inclusion of Barclays’ legacy money market and treasury operations and when bond markets collapsed in 1994, its weak franchise was left exposed. Profits halved and after other firms recovered in 1995, BZW was left trailing.